Cannot make money trading currencies if there is no return difference

This has been a frustrating year for trading G10 currencies because there is little differntial between the strongest and weakest currencies in this group.  DB has measured the difference between the strongest and weakest at 8% instead of a normal 23%. The current issue with currency trading is just getting the dollar direction right, nothing else.

Rate differentials are low and intervention has been used to stabilze rates, so it is not clear whether this current tight differential environment will change. We do not like this environment because it places execess emphasis on the flight to quality - risk/on risk/off trade.